A Tribute to the Thoughts of Another and his Friend"Everyone knows where we have been. Let's see where we are going!" -Another

Tuesday, January 7, 2014

Chapter 1

I am going to offer a series of posts (chapters)
starting at the "beginning". We will use simple logic
and common terms to explain "what has happened"
along this "journey through time". Another will edit it
for direction (as he has this post). This will be a long
process, and I hope it will offer a real value for
"thoughtful minds". As many are now starting
to discover that most of the Western ideas of
gold investment were flawed from the beginning,
so too will they find their present (gold) portfolios
"unprepared" for the storm that approaches!
-FOA 6/19/99

I know you have all read "The Gold Trail", right? But have you ever read chapter 1?

ANOTHER showed up in 1997 with earth-shattering projections from an ancient but inexorable perspective on wealth. Two years later, he and FOA decided to explain this perennial perspective with paramount modern implications "starting at the beginning… as a journey through time". "The Gold Trail" is the result of that decision, but its first step was taken seven months before they came up with the idea of separating it from the regular discussion forum as a stand-alone archive.

Consequently, the first chapter, or perhaps we could call it the Gold Trail pilot episode, languished in obscurity while the famous Gold Trail actually began on chapter 2.

"The first step is taken and thus defines the trail…"

"For people who demand solid facts and figures to make investment decisions, I submit; we are not trying to create reasons to invest, rather our purpose is to build a background for the understanding of these Thoughts. In this light, all that read this will become the pioneers of new insights."

So now, with the proper frame of mind, and without further ado, here's chapter 1:

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A gentleman leans over the fence and tells his neighbor that gold is going to rise in price from its current $300. As the person on the other side of the fence thinks differently, they both agree to a binding bet. In three months, we will settle up with a payment of the change in the price of one hundred ounces of gold. Whatever it rises, the "bull" collects that amount. Likewise, whatever it falls, the "bear" collects from the bull. Each puts a $1500 payment guarantee into a common shoe box and gives it to another neighbor for safekeeping.
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As an observer of the above, we have just witnessed the creation of a wager not unlike a comex futures contract. On each side of the fence stands a long and a short, that together create an open interest of one contract. Neither has any intention of buying gold, nor do they expect physical gold to be a part of this bet. Yet, at cocktail parties and on public internet forums, one claims to have "bought gold" and the other states that he "sold gold".

To build a further understanding of this transaction: Both of these gentlemen, probably don't have the $30,000+/- to buy or deliver 100 ounces of gold. Human nature being as it is, if they did have that much, they would most likely increase the bet to ten or twenty contracts. Clearly, the intent of this paper market, is to bet on the price of gold as it is determined by the buying and selling of other physical traders. The western public should take these trades for the concept they truly represent. ""I (the long side) bet on the "price" of gold not because we need or want the physical metal. Rather, my wager is that others will need real gold to protect themselves from bad monetary systems. In fulfilling that "need to own", these others will drive up the dollar price and I will make money while working within the confines of our good monetary system.""" The shorts make the opposite bet, in that they think the world monetary system will work itself out and induce "the others" to sell all their gold. That is, gold they bought in the first place, because they did not know that our money managers could repair the world financial system.

Yes, today Western longs and shorts are playing out these two views of the gold market. Yet, both sides are using paper gold bets to represent their beliefs. Truly, the major majority of this market does not buy or sell physical gold to represent their investment concepts. There are a few that buy coins and bullion, but, even in their large amounts, it is only a drop in the paper gold bucket.

This, my friends, is the very nature of western trading of gold. The mindset is to treat it as a concept for making currency, not protecting existing wealth. The exact same mentality exists when one invests in the gold mining industry. Even when these players see the faults in the dollar, and loudly proclaim its inflationary downfall, the largest part of their assets go into the business of producing real gold in exchange for more of the same paper currency. It is a means to build wealth through paper asset appreciation, using the very financial system the "concept" says will fail without physical gold.

There are many mental angles and philosophical side steps one can take when understanding the above. But, in this concept lies the very basis of the flaw in the current gold market. A paper market, built upon world misconceptions of currency values and the historical reasons for owning gold. The present deployment of world assets into a paper system of valuations is likened to traveling a trail of no return. History has shown that the assets accumulated in this way will never be transformed into "the things of life"! The paper wealth you currently own is nowhere near the real value your currency says it is. With the above introduction, we have begun close to the end of this journey. In the upcoming chapter one, we return several miles to walk ground already well traveled. We will observe concepts on the right and the left, not discussed by other guides. The very sights that make such a trip, "worthwhile".

"You will see this trail thru the eyes of history and feel old ways as new Thoughts!" Another

FOA

(( 1. )) Thinking Gold: A montage of views

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Pioneers:
"the first step is taken and thus defines the trail, a second step brings others and upon this journey we do now make sail"
"pioneers bring light, for directions long unknown, new spirits shine like stars, so bright the seeds are now all grown"
"quickly to the heights we climb, even the top of the mast,
for there I see the end of knowledge, as it was written in the past"
--------

To fully understand the past and present concepts of gold as money, we are going to have to use logic and common sense. In addition to these attributes, the ability to place oneself into the context of the moment of history will also be helpful. For people who demand solid facts and figures to make investment decisions, I submit; we are not trying to create reasons to invest, rather our purpose is to build a background for the understanding of these Thoughts.

In this light, all that read this will become the pioneers of new insights. Travelers in search of new vistas that best present the lost concepts of money. The real money that this generation has never known.

In our introduction, we witnessed two friends with a fence between them. Neighbors, betting on the "price direction" of gold. Not its future impact on their daily lives or the use of gold as money, but rather how much currency would other people use to buy gold at any given time. Contrast that perspective to our concept of gold and you will see that a wide gulf of understanding stands between our "minds from different worlds".

-------- "They never said it wasn't money! Only, that they could no longer use it as money for their purposes" ------

The author of that statement is unknown, but it was spoken sometime after the "Smithsonian Agreement" of the early 70s finally closed the door on using gold as part of the world monetary system. The old Bretton Woods articles were then officially dead and the dollar would no longer be a "contract currency" for the delivery of gold. Shortly after this event, banks, governments and large investment entities still agreed that gold was real money, but it should be held only in reserve. So, instead of using the dollar as a contract for gold, the world would substitute it as real gold in the currency system and thus sent it down the road of being "demoneyized".

From the 1920s to the 1970s (with striking similarities to today), gold loans between private and official sectors had periodically become so great that they simply couldn't be paid. The world economy was being built upon a debt of gold that no one could pay off.

Early on, it was agreed that because the repayment of loans in real money would break the banks, payments in newly created real money substitutes would suffice as gold. Over time, the reaction to this concept was easy to understand. Every thinking person knew that creating more (inflating) paper currency to cover existing debts would lead to devaluations of such fiat currency. Therefore, we will all hold gold in reserve, while these bankrupt deals are worked out with fraudulent money payments. Money that was no longer "contract currency". Later, gold will be revalued upward to balance these newly created money substitutes. In time, all world currencies would finally be officially devalued against gold. That, my friends is why so many investors continued to buy and hold gold as a long term savings asset throughout the 1970s. It was perceived that the world would eventually return to using gold as the money for payment of debt, instead of using paper money substitutes.

This perception was extremely prudent because history had proven, through the actions of countless generations that creating paper money to save governments and banks from bankruptcy eventually destroys the "concept" of using created money for currency. No one ever expected the general populace to continue using and saving "non contract dollars" for any extended period of time. Mostly, everyone expected the citizens to patriotically continue to use the "new inflated paper legal tender" as asset savings until price inflation exposed that they were sharing their life savings with the state. A process that would require five years at most. Never the ten to fifteen years that have passed. In the end, it made little difference how long it took, as the adjustment in value always compensated for the inflation plus interest. The only investors that didn't think gold would outlast this new system, were the ones with a "short life of little history experience".

Again, from the failure of Bretton Woods to this present day, there is an ongoing event being further played out from the early twenties. By now (2000) the world can no longer use gold as money because to do so would require virtually every debt to fail. But, what is never considered is that a fiat currency system always "fails" the debts anyway. When the price inflation begins, old currency debts lose value at the same rate as the inflation. A history lesson soon to be performed today right before our eyes. We have but to watch and learn!

But, why do we nowhere read that it would be OK for these banks and businesses to fail, thereby allowing others to buy them up for pennies and save the system? Truly, this was the same real problem with the use of honest gold money as it forces "the important" people to fail. People of influence and prestige. Persons that will not allow their debt assets to fail, even if they gain only a few years. For them the world cannot function without an "expandable monetary system"! An ages old scam that is presented to each new generation as a new and improved currency system. Custom tailored for their own technological advances and special time in world History. A special system that will force the average worker to "share" in the loses but still retain this new generations wealth! With this system, any government can then borrow or print money to inflate (expand) the money system so as to bail out failing businesses and foreign entities. Does this sound like the present IMF?

Yes, gold was our money back then (pre- 1920s). But, the bad business debts and wars of the world had "used up" much of those gold savings. Over time, the savings stock of much of the gold that every citizen, business, government and bank had, was borrowed to finance expenditures. It is imperative to understand that using the expression "gold used up" meant that it was "lent out"!

Of course, back then, even if gold is "lent out" it went somewhere, and from that new savings account (somewhere) it can be borrowed again. However, if the world financial strains become great enough, failing governments and businesses could not borrow gold at all. Therein lies the solid law of real money that scares governments today. We must totally fail and start again.

"It is to say, the gold you thought be in your bank, was not. In your account, the real money was lent and the credit claim represents your wealth" Another

It was here, in the 20s 30s 40s, in that context of time, that we witness the harsh reality that wars and governments are financed by borrowing real savings assets and spending them. When gold is used as money, it effectively demonstrates the real risks in lending one's life savings. That being: you may not get your money back. Is it any wonder that many families decide not to lend their savings? A compelling truth, that allows one to separate their money from the state and not share in the losses of others. In this light we confront the real issue of why so many governments always move from using gold as money, to using fiat currencies as money. It enables them to force you to lend!

During the time (1930s) that the American government called in gold from its citizens, it would have been very simple for the US treasury to revalue gold upwards into the $300 +/- range (from the low twenties). Yes, many major financial players would have fallen from this dollar devaluation. In addition, America would have lost much international prestige. However, the real productive assets of this great country would have been kept, "intact"! Those assets were much of the private savings of working people, and most of it was in gold, in their hands. Again, in that time, it was the only money not lent out. This unprecedented action of devaluing the dollar would have clearly identified the losses from wars and poor lending decisions. It would have forced the large wealth holders and governments to lose assets in proportion to their size. As it was, the small citizens were forced to share in balancing the destroyed assets by turning in unlent gold.

History has shown that "some great leaders" have taken the honest gold "deflation" route when they are not under the influence of "money lenders". In these situations, the context of deflation is not the destruction of the money supply, which was gold, rather it was the destruction of the debt securities held as assets. Assets, due to be paid in gold, and cannot! Deflation, in these terms is a far different animal than what is discussed today! In our time, all currency assets are debt securities. That is why any form of price deflation or price inflation, today, will destroy the entire world monetary system. Forcing people back into using real gold, the only money that cannot be deflated!

"It is the clear view for an honest eye, yes?" Another

The Bretton Woods system was bound to fail because the world governments continued to pursue a strategy of saving the integrity of all debts. Even while holding an international pledge to use the dollar as a "contract currency" for gold as money. After the US had robbed its citizens in the 1930s (of gold money) to help balance the books, the stage was clearly set to proceed into currency inflation. They continued to print "dollar currency contracts" as the dollar was a legal contract to deliver 1/35 of an ounce of gold. They did this knowing full well that this process would further demoneyize the dollar. The final destruction of Bretton Woods was but a further step to no longer using gold as money: not using gold because its use required debts to fail. If the debts are "to never" go away, the currency substitutes must be continuously inflated. Thus, the savings of workers must be diluted in order to always save the system from default. As long as the next generation believes that their money assets are growing, they will accept the currency and the fraud it represents. The price inflation (that history shows will always follow this process), is totally dependent on how many currency units the citizens will hold without spending them! If the world population can hold one trillion dollar debt units, and ten years later hold ten trillion without spending them, then no price inflation will show. However, even though each person thinks they have ten times more assets (and are as much more wealthy), that wealth is quickly degraded if and when such currency savings are exchanged for real goods. Again, history shows that only the spending of a small percent of such highly inflated currency holdings will quickly jump the price of things to such a level as to revalue the remaining existing currency. It then becomes equal to real world buying power, not the fiction in your savings account. This, my friends is the realm of price inflation and currency destruction! No currency has survived even a short time, once this spending process begins from the money inflation levels that exist today.

Now you have read some many views of the old dollar and gold. We will discuss these much further in other chapters. So, how do we (myself and Another) view gold?

I want to openly state that we have absolutely "NO" faith in gold! None! We do have "absolute", "unending" and "complete" faith in the judgment of our fellow humans. Because we travel this life journey as a society of like kind, our success over time depends on the ability of people to deal fairly with each other. There is nothing to gain in this life but the honest productive efforts we bestow upon each other. These are represented as the goods and services each of our special talents can produce. We also believe that no one, in this life, should be cheated out of any portion of their savings and will act to protect themselves from losses. This act of protection can and does take many forms as the "lessons of a long life" become the "tools of a families defense". For most of us, indeed, money is "the" lifelong lesson.

I believe, that in the time just ahead, most people will use their natural good judgment and leave the "world monetary system". Mostly because they will begin to lose savings from price inflation. If the history of human kind is any guide, they will return to the safety of the past. They will use the only "conservative money" the world has ever known that cannot be deflated or inflated. They will do this until the currencies are correctly revalued against gold. Gold will then become the de facto world money as currency will be used only for commerce and trade. Its value in trade closely governed by its exchange rate into gold.

To this end, we do not hold gold for any currency return. We hold it as money. No return of any kind is expected because it is not lent or invested. What is expected is a continuation of an open world market for the purchase of gold at lower paper substitute exchange rates. These values of world currencies, as expressed in gold will be governed by the "tolerance" of world savers to hold ever increasing amounts of paper currency as savings. In addition, the ability of governments to keep the market open with physical gold at lower prices are necessary for the continued use of the present currency system.

It is our current perception that the performance of both of these functions is coming to an end as the dollar currency creation process has ended. As this progresses, the value of gold will be best judged by its ability to purchase real things. Out of necessity, the failing paper market place presently called the "gold market", will price gold at ever lower values even as their ability to deliver gold is failing. This situation is not unlike the massive gold loans of years past. Using dollar "contract currency" as a proxy for gold, the world found out that the promise to pay at even $41=/- per ounce was a fraud! We shall see.

In chapter ((2)) we will build upon the workings of the gold market as it represents oil, the most strategic world commodity.
Thank You FOA and Another

The two neighbors have long forgotten that there ever was any gold. The trusted neighbor defaulted on all his debt while the savers paid for it with there life savings which was promptly dumped on their front lawns.

Thx FOFOA for another lightbulb moment. :-)Now this is where I struggle:"Out of necessity, the failing paper market place presently called the "gold market", will price gold at ever lower values even as their ability to deliver gold is failing."Out of what necessity? Can anyone please expand on this plz.

Out of necessity, the failing paper market place presently called the "gold market", will price gold at ever lower values even as their ability to deliver gold is failing.

This is precisely what is happening now. And it is necessarily happening because the only folks who want paper gold reside in the west. But, and here's the key point, since our fellow westerners, particularly those who style themselves as investors, aren't, in the main, remotely interested in deploying their cash into something whose price (not value, mind you, but price) is not almost guaranteed to be higher tomorrow than today, they are shunning paper gold due to its relative under performance.

In the meantime, physical gold- whose currency denominated price, at least for now, and particularly for the small saver is, dictated by the paper gold market- becomes even more attractive to savers (the billions of folks who primarily reside west of Suez) since the falling paper price allows them to acquire even more physical for fewer currency units.

However, this process, ultimately, is like the proverbial Sword of Damocles aimed at the heart of the paper market, which, despite having virtually no connection to the physical market must, ultimately, be able to deliver physical to the key global producers, aka giants, in order to remain a going concern.

Credit collapse happened, now the erosion of confidence in paper money. (Giants have already lost confidence in the USD, therefore preparing quietly for its collapse)

"history had proven, through the actions of countless generations that creating paper money to save governments and banks from bankruptcy eventually destroys the "concept" of using created money for currency."

Without the lens provided by this blog I would of never had the insight that led to me being encouraged when paper gold fell in price. Rather, I would of been excited by the following words if I had not had this lens:

"If gold catches a bid" it could cause a short squeeze.

Now I know gold is to be revalued as more and more gold goes into hiding and eventually at the top stops bidding for dollars.

The concept that we now call Freegold has been very easy for me to understand and accept. It is probably because of my cultural and educational background, and life experienced under 3rd world economic conditions.

I see that Another/FOA understood and indicated that the "Popular Western Thinking" as it relates to Gold is flawed, and they point out (by examples and explanations) the flaws inherent in that thinking. They also point out that the extremes of society, the Giants and the Nobodies, are the ones who truly understand gold for what it is – a Long Term storage of Value.

The Filipinos have a word that explain gold – Mahalaga. Translated as "Of High Value" or "Valuable".

It has been the experience a (and understanding) of the Chinese and Filipinos that "Paper Money" or "Paper Currency" has a negative event that it carries – over longer periods of time.

The Filipinos refer to this event as "Nawawalan ng halaga.". Translated as "Incurring loss of value.".

The Chinese refer to this event as "Going the path of losing the roundness ". It means - losing the value (i.e. buying power) of the coinage/currency being referenced.

The loss of buying power of the paper money/currency has always been a fact of life, for the Nobodies (of which I am one) in The East. It is always felt by the poorest, because they are the ones who hold the least currency (and least savings, if any), to which any price inflation always hit the poor first. Any price is also felt by the poor first, as it has a bigger impact (percentage wise) on their lives due to their lack of sufficient paper currency/money.

Regarding FX – Foreign Exchange. The 3rd world countries and their people also understand this, as it is a part of their lives. Imported goods always fluctuate in selling price (mostly to their detriment), as their local currency's relative value to the world's reserve currency, The US Dollar, changes every day. More than a majority of the time, it goes down against the USD. Very infrequently does it go up, and it if does, it does not last long.

Third Worlders also understand Foreign Exchange, as they have to convert their local currency to USD when travelling overseas. They also understand it very well, as many of these people work in other countries, to earn a different currency – to send home to support their family. FX Conversion Rates are a common form of knowledge by the Nobodies.

Kudos to Another/FOA/FOFOA for recognizing that Giants and Nobodies understand Gold and Currency Devaluation and Foreign Exchange !

Up to this day, gold is not accumulated by Asians as an Investment Vehicle (For Profit), but as a Long Term Holding (Storage of High Value) against the when they needed to convert it to currency, for their need (whatever it may be) at that time. It is also a Savings, and in jewelry form, quite beautiful to look at and wear (in private locations). In summary, gold denotes wealth.

The Chinese words "Pao Pei" is translated as Precious. However, something precious might not be Valuable/Worth Money. What is precious is Subjective to the Evaluator. A person might be precious to you, because that person is Beloved, but not valuable (in terms of money) to others. A memory might be preicous to you, but is not worth any money to others.

Just want to point out the difference between Precious and Valuable, as used by different Chinese words, and their meaning and usage. The word Precious is also used as a Term of Enderament by Chinese, when calling or referring to their Loved Ones (or Lovers).

What I am interested to see is if the ECB is going to purchase some gold in the wake of that lower year end MTM value. We know that they sold as the POG increased, an then stopped even as the price was heading north.

Anyone have a take on the Reverse Repo program the Fed is testing? VTC mentioned it was to prevent negative interest rates? Aren't negative rates good for FED policy which is to create inflation? Or is it because negative rates are bad for bond holders?

It appears that Another and FOA believed that Westerners have a "casino mentality". Gamblers ignore the fact that the house always wins. Non-gamblers refuse to play in a game they know is rigged. It is the government's job to push the majority of non-gamblers into the casino using either a carrot or a stick as incentives.

Also on Reverse Repos. It is an agreement to buy back the asset at a premium later on. So when people say the Reverse Repo is a tightening tool are they forgetting the FED will buy the asset back letter with a premium?

More musings ..... It has been widely written and reported on the internet (by both MSM and alternative media) regarding the "Ghost Cities" built in China, that are practically Un-Inhabited. There are even pictures in many cases. There are also photos showing several cities built as Replicas of Popular European places. I have seen photos of those that show a Mini-Paris with Eiffel Tower, and those that show a picturesque European small town, complete with lake and hills and copied houses & streets (which the original city sued the Chinese builders).

The accompanying articles always sneered at why these cities were built, for seeming No Useful Purpose. Often, the conclusions are that the Chinese government needed to build these in order for their economy to keep running (i.e. allow the construction business to keep going). Some of these "Ghost Cities" are built in out of the way locations. When I look at these pictures, I see well-constructed structures that are clearly meant for long term human habitation.

Some thoughts come to mind, and I smile at the WHAT-IFs. First, let us think about the current events. What is happening and what are facts related to these events and/or conspiracy theories shown to be true.

1. Physical gold is moving East, where it is expected to stay for a long time. Maybe 100 years or more?

2. The Elite/Cabal/Cartel who had been manipulating the banking system these 100+ years are ending their pillage of the Western Countries (because it has dried up .... the blood has been sucked up) and it has been decided that The East is where the gold is going, to fatten a new set of cows for feeding (for the next 100 years). If you look at the dis-hoarding of gold by western holders and its movement to The East, with the complicity of their governments, then it is transferring the True Wealth Storage Asset (Gold) to a different location which is More Secure that its current locations.

3. China is current the world's top producer of many goods. It is an Absolute Authoritarian Rule which is in name communist. Their current policies are more progressive than in the past, which allows its people to devote more time and effort to Get Rich (rather than overthrow the government / leaders).

4. The Chinese are a Mercantile race, not a Colonizing race. This is a very important difference in the thinking processes of the Chinese, compared to Caucasians / Westerners. In business, you are thinking of – How to get rich and Stay Rich, for a long time. Therefore, it is very important you DO NOT kill the goose that lays the golden egg, but feed it properly so that it will continue to do so.

I am not saying China (and Chinese) is the best place / people / government. I am for individual freedom and true democracy, to which the United States of America aspires to (It is and forever will be, a Work In Progress). Only a fool would not assess the advantages and disadvantages of each country (or city, or people) and how current and future economic and political events could unfold, and how it will affect one's own situation.

As Another/FOA/FOFOA wrote – Think like a Giant and (if possible) walk in their footsteps. I did and here are what comes to mind.

A. The current financial structure is on a precarious ledge and in the process of collapse. The biggest effect will be on the Western (First World) Countries because their people are used to an Affluent Lifestyle (as seen by 3rd world people) and have become lazy, complacent, and feel a sense of entitlement (as promised and encouraged by politicians). They are not used to being hungry and fighting for survival each day.

B. When the global currency revaluation occurs, in which gold will be reset to a very high value – it is simply The Way, by the Giants, to preserve the value of their wealth, accumulated over generations. We, the few, who have understood the knowledge shared by Another/FOA, are the ones who will immensely benefit and gain a little wealth. Many in the western economies will not, as they do have own any gold. They will suffer greatly as their paper assets burn into ashes.

* Crumbling economies in western nations (First World). * Angry populations facing the specter of hunger and loss of their currencies' buying power. * Scarcity and/or lack of affordability of many goods.* Deteriorating peace and order.* Potential everyday people directing their anger at The Rich, The Elite, The Politicians, etc.

As a Giant, my wealth has already been preserved, by the gold I have secured in Private Vaults located in places like Singapore, Hong Kong, Shanghai, Switzerland, etc. But do I want to stay in the formerly "First World" countries which is undergoing disintegration? HELL, NO!!!

I am relocating to where I am closer to my gold, out of the clutches of government entities that are going to be after my wealth, and where I can live in a much safer place. I also want to be able to enjoy as much of my former lifestyle as possible. I also want to be hard to kill.

Wouldn't these Chinese Ghost Cities fit the bill? Especially if there are built to replicate your old home cities / places? There's no place like home, right? Your neighbors would also be those of the affluent class. You can hire all your servants that you need, including superb protection. Need I point out that China have many skilled martial arts experts.

Do you think it is easier to kill someone in a western nation, or China? Especially, when the killer is not a local/native. Suspicious foreigners would be immediately obvious in these new enclaves. More so, when there are good protective personnel.

And what about the Chinese Aunties and Uncles, who own 50 ounces of gold or more? Won't it be nice to be able to enjoy my new found wealth and relax in a totally new un-crowded city? This would boost employment of the poor class and create a bigger middle class of Consumers. I am sure that many more enterprising Chinese would start businesses to cater to the needs of both Expats and Locals.

So, are these Ghost Cities still done in foolishness, or is there any Rhyme or Reason behind it? As the answer to many questions still remain – Time Will Tell.

Thank you for the insight.To piggy-back- A revalued gold price in the hands of its citizens can solve the puzzle on how the Chinese economy will become more of a consumer based economy. Is this the motive China is actively promoting gold ownership to its citizens?

A great tribute, and a great find. There are several times where Another has said that the paper price would be driven "into the dirst" even as demand"goes thru the roof". I had not seen this one.But some will say that Another contradicted himself by saying 'we will not know the true price of gold as it slices through $10,000/oz. and beyond (or something like that).But this "contradiction" merely demonstrates the dichotomy of the market, where something essentially worthless (paper) is used to denominate that which is "priceless" (gold) in iots transitional utility.This is why we have so many seeming "opposites" in our "upside down" marketplace.

In truth, the true value of gold exceeded $10,000/oz. a LONG time ago, back when the debt that now denominates all wealth in the world made it so, and this is why the longer the TRUTH IN GOLD is suppressed by the current dichotmous system, the higher it propels into the stratosphere.

The current depressionary deflation (masked by all iterations of fraudulent GDP, inflation rate of debt, and unemployment stats) may have slowed down the trajectory, but $55,000 seems a bit kind nonetheless.

It is always refreshing to hear the timeless truth of reality in a world steeped in a curren(t)cy of fantastic lies.

Aha! A great find indeed.This discussion has reminded of a joke I heard some time ago: So, a termite walks into a bar, and asks, "Is the bar tender here?"

Get it? Hahahahahahahahahaha!

There's more where that came from! More unfunny jokes and clichés I mean! That's what it takes to be accepted around here, right comrades?!

Now let me pontificate randomly for a bit if I may, in such a way that what I say will appear to be of deep significance and insightful meaning to the untrained eye. It will be necessary to use some vocabulary words to accomplish this, so I shall break out my thesaurus, maybe speak in code, maybe utilize some "metaphors." YESSSSSSSS.

Picture the freegold like a tree. The tree has roots, leaves, branches, and bark. The roots are the gold. The leaves are the USD, the gold "derivatives" (pft) and other paper wealth like curren(t)cies!! XD The bark is the structural support. And the branches are the SAVERS. Now, to complete this vision, the RAINS are coming, but here is the secret: it is ACID RAIN, not normal acid rain but highly acidic rain that burns through flesh and sinew, and slays all living things (It has to be highly acidic for the metaphor to work so suspend disbelief for a minute k?) Now the acid rain is going to eviscerate everything - the branches, the leaves, and the bark, BUT, the roots (GOLD) are protected a bit from the acid rain from being under the dirt, so they will be revealed by the highly acidic rains! Behold, THE FREEGOLD.

Meditate on that one, grasshopper! I shall return again with more wisdom from the heavens!

The bar is indeed tender, battered by the incessant belly bumps of weary savers who have fallen prey to the "con"-stant misrepresentations of the sad state of current affairs.

The rains approach, and with them, the drop in barometric pressure that creates the nasal distress of misalocation that culminates in a great monetary loogie, spat from the world stage like an uncelebrated chunk of tungston.

Martin Heidegger speaks for all savers when he muses, "To think Being itself explicitly requires disregarding Being to the extent that it is only grounded and interpreted in terms of beings and for beings as their ground, as in all metaphysics."

Similarly, we all return to the flower for "con"-firmation of our beliefs in such matters even as they are battered by the belly bumps of time."

Daniel, thanks for sharing. There are a lot of ideas in what you just said, and it'll take me a while to digest them as a fellow "China watcher".

One small thing that stands out is an idea I've been thinking about but from a different perspective. It's the difference in the standard-of-living for people in different countries (if that makes sense). In developing countries, that difference is huge. Consequently, IMVHO, even middle class people in such countries take security of their assets and themselves very seriously.

However, in many of the "lucky countries" your standard-of-living SOL hardly reflects who you are at all. The middle class (what's left of them) don't live in gated communities, and probably never planned on something like HI or other man-made disaster wiping out their wealth and SOL.

All of this leads me to wonder, if HI rears it's ugly head in the particular first world country you are in, perhaps move to a country were society has already dealt with the separated of people with very different SOL.

Here is an old link I've posted before by James Wolfensohn*, former head of the world bank. In it he tells a class of young Harvard(?) students that the old 80-20 rule will be flipped on it's head to 30-70 (that is the poorest parts of the wolrd become the rich 70%). I've often wondered if the mechanism for this prediction is in fact freegold. http://www.youtube.com/watch?v=6a0zhc1y_Ns

But I've since have come to realize that China is in fact very "gold-poor". It's an ongoing thought.

*(I'd quickly point out that I've been interested in that link long before the revelations of Karen Hudes, so no offense intended). Also the vid goes on forever, so if you are a one of today's kids attention span of a bee, maybe give it a miss :-p

Roach, Carl: I warn you gentlemen, the posters here not to be trifled with. To pull the tail of a lion is to open the mouth of trouble and reveal the teeth of revenge biting the tongue of deceit. I remind you of a date; August, 1971. Forty three years later, under the CB reigns of one Janet Yellen, longstanding grievances between savers and debtors are about to boil over. The pot in which these troubles simmer was kindled with the firewood of exorbitant privilege and stoked by the flames of exceptionalism that heated the derivative exposure coals of a USD suffering from an ever rising temperature and 3rd degree burns. Will the pot cool off?, will it merely simmer?, or will it boil over in the kitchen of the global monetary system - to stain the floor of financial history forever with a puddle of bright, shiny yellow revaluation that will melt the IMF$ - blistering an already singed currency now heated by the fiery intensity of hyperinflation?

Gentlemen, we walk through the enchanted forest of abstraction, dropping crumbs to remind us of the path back to the real world. Each of us grasps a lifeline, leading back to the ship of reality. But the evil banksterz pull us further in to the deep water of abstraction. A monsoon of RAIN has flooded the forest, and we can no longer find our crumbs. But wait, what is that ahead of , but the brightest flower in all of the forest! Yes, it is the flower of understanding which shines our path and illuminates our breadcrumbs. The RAIN from the evil elite banksters has not only flooded the forest, it has fertilized the flower of understanding. We walk to together, in our gumboots which we bought at Tesco for 9.95, in the flooded forest of enchantment, but the flower has shown us the path out. The path of knowledge which is truly the GOLD trail.

Roach, Carl: Another question for you both. Will the death of old IMF$ and the birth of Freegold connote the funeral of the gray-haired USD lineage or will its senile ancestry be put-to-pasture in the retirement home of geriatric currency? Hence, will the birthing be cesarean or aborted in the delivery room of the monetary system? with the umbilical cord of hyperinflation threatening as a conduit between the evolving embryo of Gold or fully developed fetus of revaluation? Thank you.

Roach, Carl: Last question - honest. Will the cannabis of the monetary system be smoked as a flower of understanding or will the grass of the currency buds be reefered to a joint passed within the rolling paper of the IMF$? What I am saying Dudes, will the lit weed of the USD conform to the doobie of Freegold? or will the Maui wowie of Gold revalue like an untouched roach of sinsemilla? As Rickards intimates.

Are we going hiking like in the picture? I used to be a cub scout. But my mom made me quit because I have a shy yet overactive bladder. And every time I had to pee, I had to go way deep in the woods. And I kept getting lost. lol

Anyway. Is it ok if you guys do the hiking for me? I'll just read about your trail adventures, and then relate it to my memories of being a cub scout.

GLD stock didn't increase with Gold price, again. Searched for numbers on 2013 CB Gold buying, not too elsusive. It might have slowed somewhat towards end of year, aside from China. Is the bottleneck tightening? With Chinese new year approaching...

I see no reason to change the orange to green on the defcon alert scale...

Buying a new home and, for all those Real Estate fan-atics, prices in the East are falling; precipitously in some cases. Yes, certain areas might be doing better than others, but, generally all areas are suffering. Cash is king! Thanks for the gift.

Hey Roach! Don't worry about being accepted. I have two other screen names on this blog, which makes me a legacy. So don't sweat it. Stick with me and you're in!

Thank you, thank you, thank you!! Today is the best day ever. Well, aside from that one day I got hugged... BY A GIRL! B-) I like you Flounder. You should come over to my house after school. I'll even let you date my sister!

I know you are all anxious for more wisdom from the heavens, but you must be patient grasshoppers. The seed of freegold wisdom does not germinate on command. You must find it within yourself. And with insufficient "con"templation of my previously disbursed wisdom, your own flowers of understanding cannot blossom. It is like a finger pointing to the moon; focus on the finger and you will miss all that heavenly glory!

My mom hugs me, sometimes. I went to my senior prom with my little sister. Actually, I just got a ride there with her and her boyfriend and then she ignored me the rest of the night.

My best friend got to second base with a girl. Yeah, that's right, he got to hold hands with her. Well, actually she was his 25 year old cousin who got a little tipsy at their last family reunion, lol. But she is very pretty.

Roach, Carl You seem to be ignoring my questions. I will try to phrase it more simply. Do either of you feel that Gold will copulate with the collapse of the IMF$ causing that sexual union to create a love-child through financial intercourse OR will our carnal knowledge of the fornication of Freegold mate as a CB quickie, sending the USD as a coitus-induced love-slave in the bedroom of of the BiS? The answer, to me, seems obvious.

Flowers make me sneeze, but not as bad as cats. I'm also allergic to latex. The doctor says I have a hyperinflated immune system and that I should avoid exposure to rubber and rubber derivatives. Does anyone know what a derivative is?

"In our current dollar gold market, the less gold is supplied, the more it pressures the price down! Players must create and sell not just more contracts to cover expiring ones, but also sell enough paper to force the price down further. In a market that's becoming shorter of physical gold, this is the only way they can add equity to cover rollover positions."

These are completely incompatible concepts. It assumes the majority of people desire freedom, which they don't. They want free stuff, and conflate freedom from want with actual freedom.

to which the United States of America aspires to

Maybe a small minority of the USA.

Their current policies are more progressive than in the past...

This is actually a pretty bad sign. Progressivism, AKA "feminism" is the mark of a civilization in the throes of death. Both the West and the East appear to be undergoing this process, though the West is farther along, admittedly.

So, If I am a Western Giant, what do I face after the global reset?...* Potential everyday people directing their anger at The Rich, The Elite, The Politicians, etc.

One cannot simply pluck the butterfly of knowledge from the flower, but must patiently wait with outstretched fingers until the nimble Lepidoptera chooses to light tentatively within one's grasp.

Hyperinflation will permeate all space as a blanket of musty Marlboro smoke encircles the seedy and dimly lit IMF$ strip club, and the USD will slouch in stupor, drooling into his glass of bourbon laced ice cubes, even as the sinewy, nubile strumpet of freegold revaluation cavorts suggestively about, twerking for the little people, and stroking the glimmering golden pole.

A fair question, Indenture. As finally, the USD is unceremoniously dragged from his seat and tossed in a heap into the back alley of disgraced fiat currencies, the Euro will remain perched happily in his chair in the VIP room, far from flaccid, receiving his long awaited, steamy private dance of stabilitee.

Fresh public case for freegold:http://www.bbc.co.uk/news/magazine-252559577 December 2013 Last updated at 19:26 ETWhy do we value gold?Justin Rowlatt By Justin Rowlatt Presenter, Business Daily, BBC World Service

- This 20% premium is kick starting the long dormant smuggling network.

- As indicated by RBI Gov Rangarajan, they don't want smuggling networks to pickup. so they keep leaking stories that Govt will reduce duty soon, thus preventing smugglers to form permanent networks, because setting these networks take time.

- Indian Govt will ultimately lose control of Foreign Exchange market when Black market Foreign currency will fetch more Rupees than Banks. Currently they are same. But as smuggling increases they should diverge. Simultaneously we should see Foreign currency sent from expatriates slowing down.

- Bron's reasoning that they are reporting the smuggled Gold as scrap Gold also makes sense. I know of no one selling their jewellery.

- Previously there was another neat trick played by smugglers. India Govt does not allow indiscriminate importing/wearing of Gold jewellery while entering India. Only reasonable used Gold is allowed and they know how to target smugglers or their human mules and do not hassle normal people.Two years ago, my family was able to declare like 160 gms of jewllery while exiting India. They give you a paper and next time, you come in, IF you are questioned, you show that and problem solved. Now they don't allow this simple proceedure. They need a certificate from Jeweller that these are actual Gold and not Gold covering(fake Gold) or 1 gm Gold. This certificate rule was added because smugglers/mules were declaring fake Gold as real, getting the paper and then coming back with real Gold. Thus avoiding any duty tax.

- All these are petty smuggling compared to bigger amounts cming via boats/ships from Dubai to West coast India.

A short while ago posted a link to a video which showed a Prof of Chemistry taking a tour around vaults of the Bank of England. The video stated that there was £315 billion worth of gold in the vault. How many tons is that? Well depends on the price being used at the time the documentary was made. But even if we assume a price near the top, this is a lot more gold than is officially the reserves belonging to the Bank of England itself. So my question is: who owns all that 'extra' gold? And as a follow-up, do we think that some of this gold is mobilised into the market? Actually I think the figure of £315 billion was a slip of a secret that the bank of England would rather have kept to themselves.

I am wondering where the smelters in Switzerland are getting their gold supplies? It seems to me it cannot all be supplied from the mining industry.

The suspicion therefore is that physical gold market continues to be propped up by mobilising gold already in vaults. Does this sound right?

If so, it could be quite a while longer before the physical market completely implodes.

The London Bullion Market is the gold center of the world, especially for Giants living in less politically-stable areas. And the BOE is an integral part of the LBMA. The BOE stores some 4,000+ tonnes of gold (might even be more than 6,000 tonnes), only 310 of which belong to England. The LBMA clears some 750 tonnes of paper gold while turning over 7,500 tonnes per day, and the BOE is one of only ten LBMA custodians. My bet is that most of that gold in the BOE vault is already unambiguously allocated to Giants both in the West and in, shall we say, less secure regions, as well as other central banks. The West is losing its privately-held gold at a rapid rate right now, but that will be corrected with a revaluation of the gold. ;D

Chinese demand is back up in 2014, premiums rising. The beginning of the choking? Or the Gold price should rise here considerably. The pattern of the last 3 days usually results in a strong up Friday! We'll see what the lab rat does today ;-)

Awhile ago we speculated from which level the waterfall could start, slightly sub production cost or much lower. Hard to say, I think it was Michael who went for 1150 or so, don't remember. It certainly would be more "surprising". But it will do what it wants to do.

BTW, some Jewelers are using smuggled gold as a means to convert black money to white. You take some black money to the Jeweler, they will show that you sold some gold to them, and they will give you back the money - some percentage, with a paper saying that you got it by selling gold.

This does assume that you are not paying the Capital Gains on the gold sold.

"Perhaps the most transparent market to track for supply restriction as it narrows?" Shrimps will never see the gold not flowing and a Giant's unfulfilled desires will instantaneously usher in the transition. Ebay is a side, side, side show of microscopic transactions.

At one time, I was tracking Ebay, using a search for a specific set of coins (to weed out the not-really-gold auctions). Ebay eventually changed their search process and my formula became obsolete. But at the time (a couple of years ago), the search results were pointing to an influx of larger scale sellers increasingly accepting Ebay as a legitimate outlet. Today, that is in fact what has happened.

I do think that the nature of the selling process, where the seller is essentially making a commitment to sell seven to ten days in the future, potentially offers an interesting view.

I'm guessing that while watching the larger (Apmex, etc.) sellers, if their new Ebay auctions were to suddenly dwindle, it could mean something. If the current auctions were cancelled by the seller(s), it might mean something even more interesting?

You're right about that, but at the moment when the giants refuse to provide physical to the market, there will likely be a period of (hours? Days?) time during which shrimps are collectively murmurring WTF just happened?

At that time, there may still be a buying opportunity for someone who leaps.

I have been reading the Trail, which FOFOA linked at the end of the this post. To my surprise, I can understand it - now.

I first found FOFOA in the fall of 2010. I tried reading the Trail then, and was totally lost. My eyes glazed over and I found myself reading the same sentence over and over again, with no understanding. I gave up on the Trail.

But I kept reading the new FOFOA posts and comments, and the older posts as time permitted.

I wanted to encourage those who have been here for a while to give the Trail a try.

And to those of you that are new, perhaps your time is better spent in the beginning, to go back and read old posts. At the top of every post, FOFOA has a list of links (right side of page). Towards the bottom of that list is "My blog in portable PDFs". The PDFs were put together by Matrix Sentry. Included in that list is an Introduction to Freegold put together by Matrix and Aquilus. They have arranged a variety of posts in an order they feel is good for a beginner to learn. Each post builds on concepts explained in an earlier post.

Happy reading and learning - whether you choose the Trail or the primer.

@Marco Polo,as far as I understand the FG thesis you are pointing exactly towards the only variable known. Yes: It seems to be quite unplausible why any Giant should sell (or even donate!) some thousand tonnes *far below market price*. What would this be good for? For prolonging a system which will die anyway? This would mean that there are giants who are really extraordanay dumb.

»Far below market price«: With this I mean, that there are two physical markets. One: the market which we all know. Some hundred bucks for an ounce. Two: the market of and for the giants. Where dozens and hundreds of tons are bought and sold. As Another told us long ago (late in the 90s): They paid for it already then thousands of Dollars for an ounce as soon big amounts (thousands if kilogramm) where to be moved.

Throwing into the market hundreds or thousands of tons would really a Live Aid for the $IMS par excellence. Prolonging its death maybe some more years. But I don't see any possibility to heel the system, not even in decades.

After many countless hours/days/weeks of rummaging through all the information out there and then coming across this blog is like striking gold! We live in an age of information and because of this we have to develop filter skills. This can only be done by actually understanding the big picture first. In order to understand the big picture you have to know how things actually work(fundamentals), you have to use your own brain!

Though my ego would like to take credit for the insight I have gained on this blog all I really did was find a blog where the author and its core foundations have understood how things work fundamentally on their own.

The only credit I can give myself is that I had to understand what they (FOA/A/FOFOA) understand and reason and re-reason their reasoning. The outcome is acceptance of the understanding of inner-workings of the system as a whole.

But even the credit I give myself is the intention of author of this blog, to not group-think, to reason and test this theory. So then all I can say is that I am fortunate!

If you had large sums of currency would you pay a premium to purchase an item off market to get a hold of it without making a stir otherwise causing others to rush in and purchase it risking that item in the future to be much more higher than you pay off market or not available?

@ein anderer, you said: It seems to be quite unplausible why any Giant should sell (or even donate!) some thousand tonnes *far below market price*. What would this be good for? For prolonging a system which will die anyway? This would mean that there are giants who are really extraordanay dumb.

Why were 1000+ tonnes put into GLD only to be withdrawn a few years later?

I see a huge difference in those descriptions because the connotation of 'putting something in' leads me to believe you can take it out. So the question becomes would a Giant lend physical gold to support the system? Yes because it will come back to him. Would a Giant sell physical gold to support the system? No, because he knows there will be no gold, in bulk, to buy back.

Yes, I know about Jilch's blog, thanks. But there is big difference between reading Jilch's FOFOA-influenced views in the pro-free-market Die Presse, and seeing the leftist Der Standard differentiate between paper gold and physical gold.

For the readers who are not familiar with Austrian newspapers:http://en.wikipedia.org/wiki/Die_Pressehttp://en.wikipedia.org/wiki/Der_Standard

To give a more vivid contrast:The free-market-oriented Die Presse is more or less owned by the Catholic Church and regularly publishes articles that are quite skeptical about global warming. In contrast, Der Standard is stridently "warmist", and its owner Oscar Brunner regularly attends Bilderberg meetings (I know FOFOA doesn't like "conspiracists" but unfortunately that's how the world works):

Thanks for the link. Another small piece of information that in due time may be viewed as a painfully obvious warning.

Mario Draghi: "I never thought it wise to sell it . . . in the case of known dollar countries it gives you fairly good protection against fluctuations in the dollar . . . that's why central banks have substantially stopped selling . . . most of the experience of some central banks who liquidated the whole stock of gold about ten years ago was not considered to be terribly successful . . .."

@Indenture said: ein anderer used the word "sell"athrone used the words "put in" I see a huge difference in those descriptions because the connotation of 'putting something in' leads me to believe you can take it out. So the question becomes would a Giant lend physical gold to support the system? Yes because it will come back to him. Would a Giant sell physical gold to support the system? No, because he knows there will be no gold, in bulk, to buy back.

Your comments do not make sense because the working theory around these parts (look at FOFOA's comment above) is that Gold is moving from west to east.

Are you suggesting that someone from the East lent gold to GLD for no reason and then took it back several years later? If someone from the west lent it and then it went to the east, well they didn't get it back did they.

That makes even less sense to me than someone selling (putting in -- same thing) 1000t to GLD and then buying it back (taking it out - same thing) at a higher price several years later.

poopyjimThe article by Weiss is quite the smoker; surprised it didn't garner any additional comment.

Though Europe has its own challenges, the vulgarity openly displayed in the US is shocking (as I experienced this morning at the Diner); shameful but good that no kids were around. Time and place for everything.

Who said the gold in GLD is moving from the west to the east? I don't remember that statement. Yes gold is flowing east but if you adhere to the 'Coat Check room Theory' then most of the gold in GLD already has an owner and final distribution at the magical 'tonnage remaining number' is just a matter of closing the books. This gold is not flowing. It is sitting very still and has only been used as a prop for the past many years.

Athrone has retained very little for all the supposed time and reading he claims to have done here.

Athrone tries to troll on the down low. He likes to mix ideas up, Leave things out. Twist, turn and incorrectly reframe things.He's the same as the bastard but this tactic probably keeps the banhammer off him.

Why do you persist Athorn if not to troll?

Countless members have answered you countless times. There's a huge disconnect between your superior thinking skills and the rest of us here. We get it. So why not move on?

If you want, keep asking people to move on and you may succeed. Soon you will being surrounded by nobody else but carl buggins, roach fork, et al. It sounds like their level of conversation is what you are striving for? After all everything here has already been settled so what is the point in further commentary?

@Indenture,

What exactly are you suggesting, that some Giant lent (leased, donated, sold, whatever) 1000t of GLD out of the goodness of their heart? What was in it for them? If you explain further (in simple terms) maybe I will understand exactly what you are suggesting.

To be crystal clear, I am asking where the 1000t that populated GLD came from and where it is going now that the very same 1000t has been removed only a few years later.

FYI I am suggesting that the goings on of GLD has nothing to do with Free Gold because GLD wasn't even around at the time of Another's writings.

@poopyjimIt is an uncomfortable topic but one that will need addressing sooner or later. In the US, and likely other parts of the world, meritocracy has mostly been displaced and we are not better for it. And that can no longer be supported.

I do wonder if Freegold might influence the outcome. Maybe that is part of the "you will really hate what's next" consequence of Freegold? I don't know, but if you don't have a sought after skill through the transition (or sufficient resources), I suspect life will be very difficult for you.

It is an uncomfortable topic but one that will need addressing sooner or later. In the US, and likely other parts of the world, meritocracy has mostly been displaced and we are not better for it. And that can no longer be supported.

100% agreed.

I do wonder if Freegold might influence the outcome. Maybe that is part of the "you will really hate what's next" consequence of Freegold?

Yes, I think it will be the start of a reckoning of sorts.

I don't know, but if you don't have a sought after skill through the transition (or sufficient resources), I suspect life will be very difficult for you.

Agreed! I think communities and families will become closer though. People will rely on each other for support once big daddy G cannot provide sufficiently.

"One problem with this view is that somehow there was a surplus in the subterranean flow that amounted to at least 1,300 tonnes—the gold that went into GLD. Did the BBs borrow that gold from the CBs in order to corral some of the demand coming from the West? Perhaps, but it seems to me that that particular Western paper gold demand could have been met with fractional paper rather than fully-reserved paper. So this logic tells me that, somehow, the 1,300 tonnes that was accumulated between 2004 and 2010 (when GLD inventory plateaued) actually was surplus to the required physical flow. And if so, then it doesn't make sense to me that the BBs would be borrowing physical from the CBs between those years.

I can't explain the existence of that surplus during those years, except to say that it existed and therefore there must be an explanation. So I am left with imagining plausible explanations to show that it was possible. One such plausible explanation is that the BIS successfully kept the biggest interests out of the flow through some sort of deal-making like Another wrote about. But that kind of deal-making must have had a finite timeline which I wrote about in Think like a Giant 2. This coincides with Ari's 2010 "target" which then got pushed to 2013 after the GFC in 2008. This correlates with GLD inventory plateauing in 2010 and then declining in 2013.

Again, it's merely a plausible explanation to show that the surplus reserves required to build up GLD were possible even though the physical gold flow was technically "cornered" as far back as 1997. The alternative is the view in the 'What If' article that the CBs were leasing out more than just their good name all that time. I suppose it is also possible that, rather than leasing the physical to the BBs, the CBs could have actually ponied up the 1,300 tonnes for GLD directly. That way no one is carrying the short-side price exposure implicit in a lease during an obvious bull market. The CBs could have done that to "corral" the Western demand, but I think it is too much of a stretch to believe the source of that gold being the CBs could have been kept quiet. So I think it is more likely that it was BB gold that was checked into the coat-check room rather than CB gold. And if the BBs had that much gold to spare (that much slack in the flow rope), then why would they have been borrowing physical from the CBs?

The consensus view is that the gold in GLD was "purchased at market" to meet the demand from investors. Well, the BBs are the market in LGD bars so even if they "bought" the gold to put in GLD, they bought it from themselves. Ergo, coat-check room. No matter what, GLD represents a place to put gold that would otherwise be part of the BBs' physical reserves if it were not in GLD. And that's why the coat-check room view is the correct view. "

@poopyjim"Agreed! I think communities and families will become closer though. People will rely on each other for support once big daddy G cannot provide sufficiently."

If that's a primary consequence of Freegold and the "you will hate what's next" then what are we waiting for! That is exactly what's needed to bring the US, and other parts of this big blue marble, closer together.

I have been exposed to the private and public sectors, at all levels, and though many are comfortable in their positions, very few are being productive to the best of their abilities (either stifled by the system or colleagues with no desire to advance); and I can't imagine anything worse for the soul. It has been a remarkable journey so far and I definitely look forward to what's next.

@Indenture quoting FOFOA:I can't explain the existence of that surplus during those years, except to say that it existed and therefore there must be an explanation.

Right then, case closed huh? It must be a closed case since you didn't reply with any of your own words just a quote from someone else years ago before GLD started to drain (old thinking shoehorned onto new facts)

So when gold goes into GLD we have no explanation (because it doesn't make sense in a Free Gold world that anyone would sell physical in volume at low prices) but when it comes out suddenly we have a narrative (Free gold is upon us because people are "dumping" paper gold).

That jives with you? Because for me it literally makes zero logical sense.

How's this for an explanation: Gold went up and suddenly a lot of people wanted gold so someone created an ETF to charge people a 0.5% expense ratio. Gold went down and now nobody wants it.

This all happened lock step with other commodities because Gold was, and is, acting like a commodity.

Simple explanation, doesn't require giants or a two tier conspiracy. If anyone can point out recent events which do not fit this explanation, please do..

Yeah, that about sums it up. There's just no remedy for defective cognition.

That said, setting aside Sam's synopsis, a +1 to jojo for his summation.

Athrone tries to troll on the down low. He likes to mix ideas up, Leave things out. Twist, turn and incorrectly reframe things. He's the same as the bastard but this tactic probably keeps the banhammer off him.

You know if you corner an angry horse, you can pick up a shovel and try to fend him off. But the better course of action, should you desire to keep from getting trampled, is to just back off and give him a small snack.

The slack ammounted too about five percent of the flow over this period. Consider the alternative within the fg narrative. The giants, who were actively supporting the imfs bought every gram that came to market, as opposed to 'only' 95% of it. How would that have played out ito long term sustainability of the flow and creating the impression that there was no shortage. You take a very dim view of the active participants, which to me only illustrates your own superficial level of thinking.

How did you get un-banned? And why do you keep repeating the same stuff over and over? "Savers will not sit in a non-yielding asset if real rates are positive". You mean "speculators" will not sit in a non-yielding asset? I feel for you, you just can't let go of the concept of chasing yield.

»The majority of savers want an income stream.« Yes. But I don’t think that they are wanting this from »deep inside«. They are conditioned by those who are as blind as they are.Main desire »deep inside« is not to lose. To protect one’s savings. No intelligent man es lending out what he needs for his retirement. It is the permanent »conquer the inflation«-blabla what leads people to »invest« (without really knowing what that means; only very few are educated enough to know how to handle those risks).And it is the small time horizon of people: »Dollar existed 2004, therefore it will exist 2024.«Currency and currency dependent assets are NEVER a good choice for one’s savings. Because you never know.

The un-attractiveness of Gold (physical) belongs to a VERY small period in time. It will go soon …

I know that we aren’t supposed to engage the banned trolls, but I feel compelled to speak up about the idea of yielding vs. non-yielding assets.From a philosophical standpoint why should one be able to earn a risk-free “income stream” from idle fiat savings? The idea that one should be able to draw an income in perpetuity without risking the underlying capital whatsoever seems immoral to me. Perhaps this is why riba is forbidden in Islamic law. It is this principle which has allowed the banking cabal to essentially take over the world – by the loaning of “money” at interest which can never be repaid (at least not mathematically in aggregate).To me, it makes more sense that an average person saves (in gold) during their productive years and dishoards their accumulated savings during retirement. Any excess can be passed on to heirs. If a person is a super-producer, they will earn an income from their excess production which will be truly earned as their production presumably serves a purpose in the physical world.

»The intelligent man acknowledges and accepts at what point in the cycle he is at.«Yes, if there is a »cycle«. But is there a »cycle« at all? I don’t think so. The figure which represents the image of gold in western opinion looks more like this IMO:

∞⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻\ (that’s where we came from and where we are, in this unique moment of history)

Therefore the image of gold in western mind will likely recover like this:

Mark R+1,The notion that one should earn money based upon the operation of a mathematical formula, unattached both to underlying economic reality (over which no one person has control) and the reality of the person with whom one is dealing, expresses a power relationship, instead of "brotherhood." And so is immoral.

Equity investment/"partnership" - sharing of the risks and rewards - expresses the moral relationship of one to another. And far more accountable/responsible investments.

Sorry bloggers I can't stop myself.Grumps, you are so deliberately obtuse that it is painful.First of all, no one said anything about "forcing" people into gold or equity investments. Some of us are, however, interested in the morality of what we do, and not merely the question of whether it increases our "bottom line" through the application of the formula of compound interest. .

Second of all, purchasing shares in the stock market is not "investing, (the money is not going into the companies), it is betting on price movements in shares, i.e., is speculation and gambling.

Investing would be finding a business that needs capital and in which you believe and preferably involving people with whom you have a personal relationship and "partnering" with that business by provding funds TO THE BUSINESS.

David Graeber covers how this worked very beneficially in the Arab world where interest was banned by religious law in <>

Someone enters a Café, and soon he realizes, that the music is too loud, the music is ugly, the people are talking nonsense. Prices are too high, the ambiente is terrible, the coffee really, really bad.Ok, may be our man is very thirsty, therefore he takes a Coke and drinks. But afterwards—will he not leave the place ASAP?

Let me ask you a question:How do you call someone how is entering this café nevertheless, again and again—although NOTHING is good for him, everything is bad and ugly and untasty?How do you call him?

"Mines will be very profitable and good investments after they recover from the destruction of our existing paper gold market. "

So you misinterpreted that as meaning - a good investment before the recovery of from the destruction of our existing paper gold market? You obviously perceive of the last 2 years as a recovery from the destruction of the existing paper gold market? Or thought that the 2013 35% price decline was a recovery? You don't consider that this destruction will continue? Okay - gotcha. Perhaps you'll come back at $1050 or $950 and start talking about yield, or whatever, again... gosh, I hope so.

The 'destruction of our existing paper gold market' coincides with Freegold. Did you presume that the paper price destruction is over - today? January 12th, 2014? or when you bought the miners over the past X years?UTFB (Understand the frigg'in Blog)

If you are afraid of missing out, just buy a single share of GDX on Sharebuilder. That way you won't have this angst of being left behind. Or if you really believe in your convictions then go short the miners. Buy some DUST, or buy some puts on GDXJ, sell some calls on ABX.

Where did Another say this one, Gramps? Ohh this is YOUR strategy...ahhh... gotcha. Shall I dig up some of your hideous miner calls in the past year-plus of trolling in this blog? Don't be afraid for me. Gambling? sorry, sorry "Speculation" what classy term. What are your profits denominated in? ohhh right - USD. And your timing is so precise you sell all and cashout (then buy gold) the day before revaluation. Right? Of course, if its the day after - then you can't buy any Gold with all your assets added together. I sleep like a baby with a Gold Maple under my pillow each night.

So you have been told this again and again and you've been given ample encouragement to have your financial decisions respected yet you can't seem to respect ours..

Roach, Carl and Flounder Question for you - Would you say the global debt of Grumps expanded carboholic gut will succomb to a brief deflation before Freegold eventually reigns and takes a defiant whizz directly in his pockmarked face as he sits, penniless, in the gutter of the IMF$? or is the present monetary systems, not unlike the boils on his pale white backside, infected and leaking pus? - while his ego is representational as US exceptionalism - those same BIS-like buttocks will get greased and penetrated by the unstoppable drive of hyperinflation? I lean to the latter. Personally speaking.

Breaking News: After a small bump, Newcrest Mining is presently down 72.1% from its 52 week highs. I appreciate this blog for discouraging me from investing in mining shares which at the time of my awakening which would have represented, from that moment, an 80% loss if Newcrest was speculated on.

FYI - In April 2011 Newcrest was $42.66 - it is now $8.90 (after a recent 6.4% rise). A banned poster encouraged many of these floundering mining shares around this time. His strategy was using Funds. A friend invested in Sprott's Jr Mining Fund - he is down 88% of his investment. Nu'ff said.

My last post 2 weeks ago on NCM @ $12.50 , I mentioned they were not value until 6 or 7 $ if ever. Today they are 10.75. The AUD is also down about 5 cents in 2 weeks. They are the largest publicly listed Aussie gold miner, they're suppost to be blue chip.

I welcome the contrarian view on the miners, but IMHO get out of Aussie gold stocks NOW.

Back to teh future; pet rocks, feathered hair and David Cassidy FTW! Say, how much is a barrel of oil if those ratios hold? Nevermind, I'll be 10x rich. No?

FOA: This is a simple concept that so confounds and hurts investors and traders in the "gold industry" today. They are mostly on the "failing" side of the war as their purpose remains to bet too large an amount of their hard portfolio on the price movement of contract gold, not own physical gold itself! I would say that the opinions expressed on most of the internet come from traders trying to time a paper trade in a failing marketplace. Even those buying gold mines can be compared to my "Paper deeds for Roman Gold" analogy. Betting on a rise in the price of real estate then selling it for Roman gold coins before the city (gold marketplace) falls.

"Truly, the ECB / BIS have made sure that there will not be enough Roman Gold to cover the property sales before the city falls"! Physical gold will not follow the same ratio to mine equity it did in the 70s. If a mine goes from $10 to $300, bullion will have gone from $300 to $15,000++.

The contract marketplace for gold has for years given the illusion to Western investors that enough gold exists to maintain the old ratios. So they continue to follow this mistaken precedent and follow their chart points. Points that can only represent the trading realities of paper. All the while planing their move that will make them some retirement money. Sadly however, once the paper gold system is broken, we will all experience an evolution in the true value of physical gold as it is expressed against mine equity, currencies, all real things and most certainly paper gold equity. Something this dollar world of investors have never seen before.

Just as Koan (a USAGOLD poster) long ago expressed bewilderment at how gold moved as fast or faster than silver and most gold stocks after the WA, the coming true break in the system will make that even percentage comparison to paper look like nothing at all. Investors that do not believe this should rejoice for the experience, it will be a chance to see something few ever get to see (smile).

Honestly, during most of our investing "timeline", we as Westerners have never understood that owning gold itself "IS" the profit one makes when a reserve currency system fails! The price of physical gold in said failing currency is "meaningless" because that price can no longer express any long term value!

@ JeffGood post but I have a hard time assigning some existential quasi religious value to gold. The focal point of gold is just the logical choice all other things considered. A choice that was established billions of years before Earth was even formed.

In my mind, in a Freegold international monetary paradigm, physical gold will ultimately price oil. Oil being the king of energy in turns prices all other forms of lesser energy (ie natural gas, solar, etc). At a minimum the holistic energy required to produce various assets and commodities will find their value relative to gold via this key relationship. This holistic energy value is ‘also’ much more than just the direct energy component but encompasses the totality of what it takes to produce whatever it is throughout the supply chain. Again the I pencil video below hits on this concept. Just view this video with the concept of the entirety of energy that it takes to make a pencil in mind.

http://www.youtube.com/watch?v=IYO3tOqDISE

Layered on top of that will be the normal supply and demand characteristics that will encourage or discourage production of various assets (houses) or commodities (wheat). So for any asset/commodity it’s possible to have swings in its relative value to gold about its mean energy value. This is entirely natural as it is this key pricing mechanism relative to gold that ultimately encourages/discourages consumption/production. The value of which (both mean and current) that can ‘only’ be found by a functioning free market. This is not to be confused with existing central planned crony ponzi paper scheme many mistakenly view as capitalism. The days of this system are clearly numbered as the Energy Return on Investment simple won’t support the level of waste inherent in it any more.

Thus under the freegold monetary paradigm all other things of lesser value will ultimately trace their value to gold via energy (i.e. the mother of all consumables). Sounds like a great monetary system in which to manage the remaining resources on Earth until mankind figures out how to harness the energy of neutrinos or something as breakthrough that.

I have to think if a little shrimps like me/us have figured this out those in position to know and with power/influence to do something about it must also have this in mind. What is clear in my mind is that the monetary system that supported the geometric growth in mankind can’t continue in a world that is fast approaching a depletion of resources (i.e. Chris Martenson). We basically need a post industrial revolution monetary system which improves the efficiency by which the resources that remain our utilized. At the same time we have trillions of legacy debt/IOUs/social promises that must be dealt with somehow (i.e. Daniel Amerman).

The convergence of these two realities seems inevitable and elevating gold to the focal point seems the least disruptive way of reconciling these two realities while transition mankind to monetary system that supports the reality clearly ahead of us.

Either that or we figure out how to harness neutrino power, my bet is on gold though.

"Honestly, during most of our investing "timeline", we as Westerners have never understood that owning gold itself "IS" the profit one makes when a reserve currency system fails! The price of physical gold in said failing currency is "meaningless" because that price can no longer express any long term value!"

Which means, whether you're shorting the miners or investing in 'prepper' companies, you will still need to convert those dollars into physical gold before the waterfall. And the timing on that could be very precarious.

(a little preaching to the Cult when nothing else meaningful appears to happen these days)

Just discovered the Freegold Dillettante, I must have missed it last June. Initially thought the hair on FOFOA's head is a tad optimistic (but its Jeff)-well there's a joke circulating that FreeGold will happen when FOFOA has a head full of hair :-(

Why do you keep harping on about mining shares when no-one here buys your bullshit? It seems you are the only dimwit in the room who doesn't seem to grasp that those profits will not remain on the table for shareholders to get.

Have you spent any time looking at the historic interaction between gold mines and governments when gold was still part of the monetary system?

Meditate on the hungry collective...and ffs stfu about this nonsense. We get it. You are an idiot. Stop making it our problem.

Thanks, Knallgold!Degussa seems to be declining »the four elements«:• Wind (engl.)• Fire, engl. They have also very intelligent Cartoon ads running for example in the Frankfurter Allgemeine Zeitung. I’ve asked them some weeks ago, and they told me that they are thinking to publish them in the web.

SM wants to fall and the $ looks like a limp willy. Yeah I'm reading the name Jim Cramer too many times on yahoo.finance.

And then there's this already surreal play of all the mathematical possibilities between taper, not taper, dovish taper, hawkish taper and as the latest addition, drum roll please, "taper the taper"! Now that will give rise to taper the hawkish taper, dovish taper of the taper, no taper of the taper the taper... algorobots &@**ç%#

Otoh silence at GLD, maybe the guy is recounting the bars to see if we're already dipping into the leased stock!? Would that lead to short covering?

It seems to me that the predictable "surges" (OH the goldbug drama, 10 bucks up is a SURGE) in paper gold ... if I understand the coat check analogy correctly ... is merely JPM (and their ilk) refreshing their inventories amidst the steady downward trend line.

I had commented some time ago upon an article which claimed, ineffect, that ALL things (traded commodities) are severely mispriced by their derivative action.

This takes into account that all traded commodities are priced in the manner described by Another above. No real physical supply/demand dynamic, but rather through bets on voilume price movement.

I do not know if and how those markets trade, to verify such a claim, but I still contend that the current gold market will not so much be destroyed by Freegold, but rather it will be reduced to a sideshow that does not SET the price in fiat, but merely entertains bets (in fiat) on price movements, while said price is set elsewhere (eastward) in the supply/demand physical markets.

A parallel to an equity based system.

I haven't really received much acknowledgement, guidance, feedback or counter argument to this perception, as it appears trolls suck the life out of the forums groupthink energy, rendering the counterpoint of intelligent discusssion somewhat moot.

Just heard in the radio news that Greece posted a primary surplus in 2013 of 800 million euros. Posting a primary surplus is key as it would open the way for Greece to pursue debt relief from the EU and IMF. costata said to watch for this...

Firstly, how do you know many don't? Why do you insist we gamble like you? I can't tell you my vast profit from DGLD (VelocityShares 3x Inverse Gold ETN) you shaved ape. But, despite my lack of comfort, the 'bonus' has already been converted to physical. I don't feel the need to brag or exaggerate unlike your ridiculous "Newcrest is on Fire!" statement. You want to retract that? No need - it has already been removed like all your rubbish. How'd you do on this one the past year? As well as being the Village Idiot here Grumps you have no class... at all.

You know full well the reason we don't go 'all in' on shorting the miners. No one knows when this will end as you might get if you bothered reading the blog instead of yapping and drooling with your bright red clown-nose on. The profit from a revaluation of the 'Freegold' variety will outweigh all the gambling for USD you want to do buying or shorting the miners. We don't buy physical gold to make more USD - but to protect us from USD... gestate on that blotto. Since you refuse to awake - get the hell outta here... for good. You remain an irritated pimple on the buttocks of this blog.

GLBI do hope it works out for you but the risks far outweigh the rewards. I hate to see someone lose their fiat when it could be put towards the ultimate wealth preservation asset; gold.

Though it would be nice for FG to happen during my lifetime, but if not, I feel far more comfortable with passing this asset on to my heirs or perhaps a charity or two. Stocks, not so much. I know, to each their own (though you know the intent of this blog).

In this chart that FOFOA retweeted it shows the cumulative mintage (in ounces) of sovereign gold coins since 1970. It's hard to get a precise estimate with the scale increments on the y-axis but eyeballing it looks like US Gold Eagles total between 600-800 tonnes.

https://pbs.twimg.com/media/BUbXZNcCYAEQGtl.png:large

I know the US treasury breaks down there gold holding by depository, i.e. West Point, Fort Knox, Denver Mint, NY Fed. The Denver Mint is then sub-categorized to include working stock for American Eagle coin mintage.

Does anyone know if those 600-800 tones and counting are replenished by new Treasury purchases from the market (mines I would guess), or is that a permanent draw down on the 8,000+/- tonne Treasury Gold stockpile?

According to the Gold Bullion Coin Act of 1985,gold for the coins is to be newly mined, or can come from the US reserves:

“(3) The Secretary shall acquire gold for the coins issued under section 5112(i) of thistitle by purchase of gold mined from natural deposits in the United States, or in a territoryor possession of the United States, within one year after the month in which the ore fromwhich it is derived was mined. The Secretary shall pay not more than the average worldprice for the gold. In the absence of available supplies of such gold at the average worldprice, the Secretary may use gold from reserves held by the United States to mint thecoins issued under section 5112(i) of this title. The Secretary shall issue such regulationsas may be necessary to carry out this paragraph”.

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